For most young adults, buying a house feels like a completely impossible goal. However, experts say that if college grads would start saving 20 percent of their monthly salary right away, buying a house will eventually be a possibility. If you’re wondering how you can ever afford a house, check out these tips on how to start saving and exploring the market so that you’re all set to buy when the time is right.
Benefits of Saving Over Time
Although you may feel like setting aside 20 percent of your income is tough when you land your first job, saving money is an important life skill that many 20-somethings lack. Also, money in savings accounts grows over time because of accrued interest on your savings accounts. Building this type of nest egg not only gives you money for a down payment, but it also provides money for renovations, decor, and other things you’ll need for your new home.
Where To Start Saving
The best way to save money for a house is by setting up a high-interest savings account. These accounts provide higher returns, which means that your money works for you while it sits in the account. In fact, some experts say that high-interest savings accounts can earn you as much as 150 times more interest than traditional savings accounts.
For those who have a defined plan to purchase a house, fixed-term savings accounts may also be a great option. These accounts give a fixed rate of interest, but require you to commit your money to the account for a set amount of time. However, these accounts can be risky because early withdrawals come with penalties and fees, so only choose this option if you know for a fact that you can set the money aside and forget it for 2-10 years.
Why You Should Explore The Market
Even if you don’t think you can buy a house for five to 10 years, it’s never too soon to start exploring the market. Not only will checking the market help you know what houses in your area sell for, but it will also help you know when prices or interest rates change — which can help you pinpoint the best time to buy.
Furthermore, you can explore the market to help you find great mortgage deals.. Websites like Trussle can help you find the best mortgage deal based on your current situation or even just show you current interest rates. This kind of research will arm you with all the relevant information you need when the time is right.
Buying a house is an exciting and life-changing event. Although you may feel like you can never afford a home of your own, preparing for this life event in your 20s can set you up for success down the road. After all, it’s never too early to start preparing for your future.
Photo by Austin Distel on Unsplash
